EM CEEMEA CREDIT: Arab National Bank: Q2 earnings reviewed
Aug-28 07:33
Arab National Bank: Q2 earnings reviewed
(ARNBAB; A1/A-/A-)
- In anticipation of the mandated new AT1 $ deal, we review the latest earnings released on July 22.
- Profitability on the rise with Total op Inc +11.1% y/y at almost SAR 2.6bn, mainly a reflection of Net SC Inc +11.9% y/y at SAR2.17bn (Net F&C +15.6% y/y). PBT +8.1% y/y in excess of SAR1.5bn. NIM evolution at 3.67% looks sequentially stable despite rates cycle headwinds. NIM guidance for ’25 is revised to 3.5%-3.6% (above industry average reported at 3.09%). Efficiency remains adequate with C/I ratio in line with guidance below 32%.
- During Q2, the Bank has seen continuation of B/S expansion, with total assets approaching SAR269bn, +1.6% q/q. That is consistent with upward trajectory showing +8.3% YtD. Corporate lending remains in focus (+16.4% y/y, SAR186.5bn) and accounts for 75% of total, we note some concentration across key industries (Transportation & storage 39%, Real Estate 19%, Services 19%). The retail segment (+12.6% y/y) offers a balanced mix of secured (home loans 54% and auto loans 3%) and unsecured (personal loans 40% and credit cards 3%) exposure. Lending growth remains well supported by deposits (+14.9% y/y, SAR201.7bn), with CASA +18.6% y/y at SAR110.1bn vs time deposits +10.8% y/y at SAR91.6bn.
- Asset quality looks best in class, with NPL ratio on a downward trajectory at 1.18%, sequentially lower vs 1.34% in Q1, coupled with a strong coverage ratio at 141%. CoR remains moderate at 42bp sitting at the low end of the 40-50bp FY guidance range.
- Liquidity benefits from strong deposit base, with L/D ratio at 82%, well below the regulatory cap of 90%. LCR is sequentially stable at a conservative 133%. Capital remains adequate with CET1 at 16.5%, and CAR at 19.6%. RWA show +13.8% y/y.
- For reference, Arab National Bank was founded in 1979. It boasts a strong focus on the Kingdom of Saudi Arabia with international presence in London. With over 2mn customers and 122 branches, the Bank provides services and contributes to national growth across diversified economic sectors.
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BUNDS: Testing Intraday low, Heavy volumes goes through in ERZ5
Jul-29 07:32
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- The most notable size going through is in the ERZ5, sold in 10k, and this expiry already trades 3 times the rest of the White strip.
- No Block trade have printed in ERZ5.
EURIBOR: Record Volume day in the Calendar spread Yesterday
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- While the Volume is those Calendar spreads are non existent today, the chart clearly shows a record day in the ERM7/ERU7 Yesterday.
- Also note that plenty more were done on legs, so not showing in that total outright volume.
(Chart source: Bloomberg Finance LLP/MNI).
STIR: Trendline Support In ERH6 Holds
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Euribor futures are -0.5 to -2.0 ticks through the blues, unwinding a little of yesterday’s recovery. We wrote last week that ERH6 had bounced off trendline support drawn from the May 2024 low, and this level continues to underpin price action in the contract.
- Although the US-EU agreement struck over the weekend should reduce near-term trade policy uncertainty, a 15% near-universal tariff rate is still a net-negative to the growth outlook, and more severe than the ECB’s June macroeconomic projection baseline.
- The MNI Policy Team latest sources piece, released yesterday, suggested the ECB’s hawkish shift following its last Governing Council meeting is more limited than markets’ reaction would suggest, particularly given the weekend’s trade deal, Eurosystem national central bank sources told MNI, admitting that while there is a new mood music it has been overinterpreted…. sources told MNI there is still a strong possibility of a further 25-basis-point cut, even if most Governing Council members would now need to see a deterioration in the outlook for this to occur.
- ECB-dated OIS continue to lean in favour of one more 25bp cut this cycle, with 16bps of easing priced through December.
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| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Sep-25 | 1.885 | -3.8 |
| Oct-25 | 1.849 | -7.4 |
| Dec-25 | 1.762 | -16.1 |
| Feb-26 | 1.742 | -18.1 |
| Mar-26 | 1.710 | -21.3 |
| Apr-26 | 1.710 | -21.3 |
| Jun-26 | 1.713 | -21.0 |
| Jul-26 | 1.715 | -20.8 |
| Source: MNI/Bloomberg Finance L.P. | ||
